Here’s how our trade on Synaptics ($SYNA) worked out. (March 19, 2019)

by DAN SYNA 
We are going to look at our good buddy Synaptics ( NASDAQ: SYNA ) here. Yesterday, in the Chart of the Day, I outlined a specific trade based on what was happening yesterday and we will go over it, it worked out really, really well. Don’t give me the credit, give the stock the credit I guess, I am just telling you how to do this stuff.

The stock closed here at 33.45, 33.46 and I said what you want to do is, you want to only buy the stock above the close, above 33.46. Then you immediately put your stop below yesterday’s low, which is 33.32. So you have got a VERY tight stop, a nickel, and a dime, like 15-cents, literally nothing. The idea is that this stock is SO oversold, way below 3 standard deviations that it almost has to snap back; that’s the idea.

So what happens? The first thing this morning the stock gaps up a little bit and literally never looked back. The low of the day was the opening print; I guess it traded on the bid somebody sold it at 33.32. But if you look on the intraday chart you will see this; the stock got crushed yesterday, traded down. We went through all of this last night.

Then today, when it gapped up, it literally just kept going up and in a matter of about 5-6 minutes you are up literally 5 percent on the stock. You are buying it here, forget these moving averages they are meant for a daily chart, you are buying it here. You are immediately setting a stop below here. So you have got super low-risk, buy it almost right at the low, set a stop just barely below that, you are risking a percent and then in VERY short order you’re off to the races.

Even if you had waited until the first candlestick, even if you waited for the stock to peak and then you print a red candle like that, which doesn’t necessarily mean that the stock is going to continue to go but you need some kind of methodology. So you buy during the first minute. You know what?. The Frankly, let’s say you wait. Even though the stock is moving SO strong you decide to wait until it finishes for the first minute. So you are buying the stock here and you say, “You know what? I am going to hold this thing until I see the first red candle.” That’s here; you sell right here, you’re up 1.83 percent, right? That is 63-cents, which might not sound like much, but guys, this was a real no-brainer trade.

What I have given you is a formula for doing this; a formula. What you actually would be doing in something like this is, if I say this is your entry, above this level, then that’s your entry. The stock opens up, you buy the stinking stock and you immediately put your stop here. Now you are in trading management mode, where you have got a really, really nice return going. Now you are looking at this and you decide to sell here; now you are up $1.43, almost $1.50, over 4 percent on a nice easy no-brainer trade.

The lesson here is that fortune favors the bold and you have got to act quick. If you see a stock that is so oversold like this and then you see it gap up a bit in the morning, as long as you can reasonably set your stop just below the prior day’s intraday low, that’s money. The only question is, how much?

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